Upcoming derivative guidelines in the Philippines are expected to boost the onshore derivatives market and start a synthetic collateralized debt obligation market. Officials expect the Bangko Sentral ng Pilipinas to issue regulatory measures following circulars earlier in the year.
There are likely to be two sets of regulation. One will deal with interest rate and credit-linked derivatives and the second will specify CDOs as a separate investment product, according to market officials. "We're optimistic this will come out in the first quarter," said an official at ABN AMRO.
"This won't be earth-shattering, but there will be deals to be done," said one senior credit structurer at a bulge bracket house. Market officials estimated around 10 domestic banks would have the capabilities to enter CDO transactions. This year credit officials at international houses have been consulting with the BSP in regards to credit products.
The regulatory changes follow recent developments in Thailand, which has paved the way for local banks to invest in CDOs (DW, 11/01), as well as continuing deregulation in Korea and Taiwan.
